When is the right time to raise capital?

Description

Tomasz Tunguz, Partner at Redpoint Ventures explains why you should start your funding process somewhere between 9 to 12 months before you’re running out of cash.

Video Transcript

When is the right time to raise capital?

You really want to be in a position where you are close to attaining the milestones that are kind of set in the market that we talked about before when you raise capital. You’d like to have somewhere between 9 to 12 months, most of the time is 6 to 9 months, but ideally more, of burn in the bank. In other words, you don’t want to be starting a fundraising process when you only have three months of cash left in the bank, because you don’t have a whole lot of negotiating leverage in those situations.

So you really want to start thinking about your fundraising process about 12 months before you out of cash, probably start having conversations with investors, building that up and then formally launching your process, somewhere between 6 and 9 months before you are completely out of money.